Correlation Between Balchem and Eshallgo
Can any of the company-specific risk be diversified away by investing in both Balchem and Eshallgo at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Balchem and Eshallgo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balchem and Eshallgo Class A, you can compare the effects of market volatilities on Balchem and Eshallgo and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Balchem with a short position of Eshallgo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balchem and Eshallgo.
Diversification Opportunities for Balchem and Eshallgo
Very weak diversification
The 3 months correlation between Balchem and Eshallgo is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Balchem and Eshallgo Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eshallgo Class A and Balchem is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Balchem are associated (or correlated) with Eshallgo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eshallgo Class A has no effect on the direction of Balchem i.e., Balchem and Eshallgo go up and down completely randomly.
Pair Corralation between Balchem and Eshallgo
Given the investment horizon of 90 days Balchem is expected to generate 8.35 times less return on investment than Eshallgo. But when comparing it to its historical volatility, Balchem is 5.14 times less risky than Eshallgo. It trades about 0.2 of its potential returns per unit of risk. Eshallgo Class A is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 236.00 in Eshallgo Class A on August 28, 2024 and sell it today you would earn a total of 156.00 from holding Eshallgo Class A or generate 66.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Balchem vs. Eshallgo Class A
Performance |
| Timeline |
| Balchem |
| Eshallgo Class A |
Balchem and Eshallgo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balchem and Eshallgo
The main advantage of trading using opposite Balchem and Eshallgo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balchem position performs unexpectedly, Eshallgo can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Eshallgo will offset losses from the drop in Eshallgo's long position.| Balchem vs. Sensient Technologies | Balchem vs. Innospec | Balchem vs. Minerals Technologies | Balchem vs. Oil Dri |
| Eshallgo vs. Lululemon Athletica | Eshallgo vs. Asbury Automotive Group | Eshallgo vs. SunLink Health Systems | Eshallgo vs. Simon Property Group |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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